Diamond & Specialty Minerals Summary for Dec. 11, 2017
by Will Purcell
Ken MacNeill and George Read’s Shore Gold Inc. (SGF) spun its treadmill again today, dropping one-half cent to 16 cents on 408,000 shares. The company had officially been maintaining a silence regarding its Star-Orion South diamond project in central Saskatchewan, but it made a presentation last week to the Diamond Development Advisory Committee (DDAC), which met in Melfort. (The committee, which includes representatives of communities and First Nations groups near the project, was established by Shore Gold at the height of its promotion several years ago, but there has not been much need for advice for the past few years.) The new meeting of the DDAC is the result of Shore Gold having granted Rio Tinto an option to earn a 60-per-cent interest in the project, in exchange for $70.5-million in new work, including drilling and a feasibility study.
Shore Gold’s new presentation — 26 slides accompanied by Mr. Read’s eternal optimism — was for the most part a reminder of Shore’s effort over the past two decades; most of which occurred in the mid-2000s. Nevertheless, there were a few dollops of new information that confirm Rio Tinto’s intent to diligently recheck the work previously completed by Shore Gold a decade ago, which culminated in a 2011 feasibility study.
Rio Tinto has already begun the first phase of its four-phase program, an $18.5-million effort that will not give it an interest in the project, but which will hopefully provide confidence to proceed with a second phase, another $18.5-million drill program that will give it 51 per cent of the Fort a la Corne project. (Star and Orion South are but two of several huge kimberlites on the property, although they are the ones with the best shot of becoming a mine.)
Rio Tinto and Shore have wrapped up a 10-hole core drilling program that began in mid-October. The holes were described as “geotechnical investigations on the Star kimberlite,” but they are also pilot holes for their much larger bulk sampling program next year. While Shore never revealed the sites selected for the new bulk sampling, the company’s DDAC presentation shows the locations clearly. Seven of the 10 sites are within or on the perimeter of Shore Gold’s underground bulk sampling workings, while the other three are twins — or at least close siblings — to large-diameter bulk sampling holes that Shore drilled after its underground sampling.
Shore Gold’s latest resource estimate for Star, 193 million tonnes indicated at 15 carats per hundred tonnes (cpht) and 57 million tonnes inferred at 11 cpht, have rosier grades than the company’s raw bulk sampling data. Shore averaged 14.5 cpht across 75,400 tonnes of kimberlite mined from underground at Star, and just 7.1 cpht across 16,200 “theoretical tonnes” of kimberlite excavated by drilling. The grade variation is the big question facing Shore’s new partner and it was also a big reason that its previous partner, Newmont Mining Corp. (NEM: $34.67 (U.S.)) quit paying its share of the costs in 2009.
Mr. Read, Shore’s tireless senior vice-president of exploration, says that the large diameter drilling “can be an aggressive sampling method resulting in some diamond loss and breakage,” so he had the drilling grades “reconciled” with the underground grades using diamond size frequency curves. Mr. Read may be right; but Rio Tinto is clearly willing to spend nearly $20-million on its first phase of drilling to find out.